Ackman and Buffett Profiting from All That 'Frackin' of the Bakken

I started investing a couple of years ago in energy companies that are basically “pure plays” on unconventional or tight oil plays.

I’ve got exposure to the Bakken, to the Eagle Ford, Cardium, Duvernay, Swan Hills, Montney, Nordegg, Mississippi Lime and likely a few more.

My reasoning was that oil unlike natural gas is a global commodity with pretty steady demand growth, and that with prices of $70 plus going forward these companies were great bargains as the stock market (in my opinion) does not appreciate the value of the land that they own.

So far I feel like I’ve made a very good decision as the companies I own are growing production, cash flow and reserves at very rapid clips.

So I keep buying either compounding my error or increasing my eventual return.

Two gentleman who are much smarter than and who also have exposure to the growth in oil production from tight oil are Warren Buffett and Bill Ackman. Unlike me however, these guys have profited from this exposure as detailed in this Bloomberg article:

Ackman’s Pershing Square Capital Management LP, which bought most of its shares in late 2011 as the stock rebounded from a two-year low, stands to benefit as CP expands operations in the Bakken.

The railway is one of only two with tracks in the North Dakota part of the region, which also includes Montana and the Canadian provinces of Saskatchewan and Manitoba. Buffett’s Berkshire Hathaway Inc. (BRK.B) spent $26.5 billion in 2010 to take over Burlington Northern Santa Fe LLC, the other railway with lines running directly into the Bakken.

“Ackman was smart,” said Tony Hatch, an independent rail analyst in New York. “When he bought his shares he knew that an aggressive management could take advantage of opportunities in the Bakken shale.”

Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC.
Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.